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If you are not among the people who bought an iPhone in US from AT&T, then the chances are your iPhone is locked and it can’t be used as it is with T-Mobile and other service providers.  However if you bought iPhone in Europe or India then you might have already bought a factory unlocked iPhone.

To use it with T-Mobile and all, you will have to unlock this device.  Unlocking an iPhone involves two steps, one Jailbreak and then unlock. 

Jailbreaking is required to install Cydia which obviously is not available through iTunes store.  Please follow the below mentioned method to jailbreak and unlock your iPhone so that it can be used other than AT&T.

Step 1: Jailbreaking the iPhone:

1. Restart your computer and iPhone before going to the next step.  (This is to make sure no background process is running on any device.)
2. Open iTunes on your computer.
3. Connect your iPhone to computer using USB cable came with your iPhone.
4. Head over to iPhone Dev Team Blog to download the official torrent for ‘redsn0w’.  ‘Redsn0w’ is a must download to jailbreak iPhone 3G and other devices but not iPhone 3GS.
   (I assume you know how to download file using a torrent.  Else use one of the unofficial mirror location to the file.)
5. Either download Apple iPhone 3.0 firmware update file,‘iPhone1,2_3.0_7A341_Restore.ipsw’ or search if it already exist on your computer provided you upgraded to 3.0 already.
6. Once you have successfully downloaded ‘Redsn0w’, please run the file by double-clicking it.
7. On the very first screen you will see ‘Browse’ button, please click on it to select the ‘Firmware restore’ file from step 5.
8. Select ‘Next’ to go to the next screen.  After you click ‘next’ please don’t select ‘Icy’ at this time, let ‘Cydia’ selected before continuing.
9. Click Next and follow on screen prompts to jailbreak your iPhone.
   (Your iPhone may restart several times.  You might even feel that your iPhone is not responding, but don’t worry, just have little patience.  Let redsn0w do its job.)
10. Once the process is complete you will be able to see the default ‘Home’ screen know as ‘Springboard’ on your iPhone.  You can play with it at this time as an iPod Touch.  But you won’t be able to make any calls yet.
11. You will see a new app on your iPhone called ‘Cydia’.  This is where you can install various awesome apps that are not officially available from Apple iTunes.

If you are on AT&T and just wanted to download and use some unofficial apps which are not available in iTunes store, then you don’t need to unlock your iPhone.

Launch Cydia to search and install these apps from it.  Qik, Ustream Broadcaster are some of the cool apps you can try to start recording and broadcasting video from your iPhone 3G.  Or read this article to know how you can record video from your iPhone.

If you are on T-Mobile or other networks, then you will need to unlock your iPhone to use it as a phone.  Please read further steps mentioned below.

Step 2: Unlocking the iPhone:

1. Connect iPhone to some Wi-Fi network.
2. Launch Cydia, let it load the packages.  Please select ‘User Graphics Only’ if you are not a developer.  (Most of us fall into this category.)
3. Select ‘Upgrade essentials’ to reload Cydia contents.
4. Go to ‘Manage’ tab and then select ‘Sources’
5. Click on ‘+’ to add a source as ‘http://repo666.ultrasn0w.com’.
6. Let Cydia reload the content once again.  Once done, search for ‘ultrasn0w’ and run it.
7. Once the process it complete you can restart iPhone once and insert your T-Mobile SIM card.  Now you will be able to make call and use iPhone as a phone too. (Make sure 3G is off.) 
8. Congratulations, your iPhone is now unlocked and can be used with any GSM SIM card.
9. Restart your iPhone and insert the SIM card.  Enjoy….

Disclaimer: It goes without saying, it is your responsibility to check and follow the on screen prompts properly.  Software and other downloads are created and maintained by iPhone Dev Team.  It is your responsibility to understand warranty issues and all and I can’t be held responsible if anything goes wrong with your device.

Edit: Just realised that this is the 400th Post on Knowliz. I think I have come a long way on Knowliz with 400 unique articles and obviously there is a long way to go…. Thanks to everyone who made this possible by giving some attention to Knowliz and appreciating the content time to time.